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The Role of Government and the Impact on Politics

The main aim of government involvement in the economy entails providing social services and a legal framework that allows equal distribution of goods and services in the economy. Government involvement helps to protect consumers from exploitative private entities and ensure equitable distribution of goods and services in the economy. Through specific state and federal agencies, the government comes up with policies to regulate the activities in the economy. Economists argue that too much government involvement in manipulating the economy has more negative effects than benefits. The role of government should ensure a favorable economic environment through actions like monetary policies, friendly taxation, and favorable government spending and regulations (Forbes, 2016). The role of government in the economy has been a contentious topic among economists. Understanding the pros and cons of government involvement will help understand the need for a balanced framework between a free economy and government intervention.

Government Agencies

The government has established specific agencies for different oversight sections of the economy. Economists agree that government agencies serve two main functions; protect citizens’ properties from invasions and produce goods that are sensitive or difficult to be handled through private entities (Gwartney et al., 2018). A cost-benefit analysis of the U.S Department of Health and National Labor Relations Board agencies will highlight the pros and cons of government involvement in the economy.

U.S Department of Health

Reason for Government Intervention

Healthcare is a sensitive department to be left in the hands of private players. U.S government intervention in healthcare helps ensure universal access to healthcare and regulate the market hence avoiding a total market failure.

Pros of Government Involvement in the Health Sector

Government involvement has ensured effective coordination between different health industry sectors to develop preventive measures for diseases and health policies. A health policy requires a multi-sector approach to achieve a system-wide approach towards achieving overall goals in health sectors, such as affordable medical care, improved health standards, and patient satisfaction (Campos & Reich, 2019). In addition, the U.S and state governments help supervise and standardize healthcare practices through the enactment of regulations.

Cons of Government Involvement in the Health Sector

Government interventions have limited patients’ access to different treatment options and drugs. The multi-system government involvement in healthcare has contributed to high administrative costs in healthcare, resulting in a high cost of medical care. Expensive healthcare only favors the wealthy, making the poor and unemployed unable to afford medical fees.

Influence of Political Process in the Health Sector

Libertarianism opposes heavy government involvement in health care. According to libertarianism, a free market system in healthcare will help improve healthcare quality and make it more affordable. The government and few insurance companies have created a monopoly in health care resulting in inefficiencies in the health sector.

Viewpoint on Government Involvement in Healthcare

A free market system with little government intervention will help ensure the efficient allocation of resources in healthcare. From an economist’s point of view, the government does not have any funds. Instead, it uses funds collected through taxation to fund its various projects and programs. Corporate taxation results in a high business cost; this situation hinders entrepreneurial growth and reduces the funds available for investments (Tamny, 2015). In addition, most government healthcare programs are designed to benefit a few individuals at the whole population’s expense.

A free market system with little government intervention will result in low taxation, thus making health care more affordable. A free market system will attract many investors who will compete towards offering quality and affordable healthcare services. Private investors will ensure efficient utilization of resources, therefore, reducing wastage and duplication of roles.

National Labor Relations Board

The rationale for Government Involvement

The National Labor Relation Board is a federal agency that ensures fair employment practices by private companies. The board is responsible for enforcing labor regulations and standards and implementing collective bargaining agreements. U.S. Government involvement in labor and industrial relations aims to promote safe working standards and maintain stable labor relations in the market.

Pros of Government Involvement in Labor Relations

The government ensures fair labor practices and a stable economic market, thus promoting production activities thus improving the overall economic performance of the country. The government’s involvement includes political systems that help shape the labor unions and enact legislation to ensure fair employee treatment (Budd & Lamare, 2020). Employee representation leads to the enactment of safe working and compensation policies that improve employees’ living standards and promote social improvements.

Cons of Government Involvement in Labor relations

Government intervention in labor relations creates additional taxation inform of income taxes that reduce the net employees’ income. The creation of labor unions and the enactment of compulsory collective bargaining results in improved labor costs, thus reducing companies’ profits. High production costs are passed over to employees through increased product prices, reducing employees’ purchasing power. In addition, government involvement in labor relations can result in deficit monetary policies, income inequalities, and inflation. For instance, increased liquidity and money supply through high salaries can slow the economic growth of credit markets, thus stagnating capital creation and encouraging inefficient use of resources (Ames & Forbes, 2014).

Influence of Political Processes in Labor Relations

An increase in unions and laws protecting employees has resulted in protests by private companies. Most companies argue that they have the right to control private investments and should be allowed to conduct business freely with minimal government interference. High penalties and fines arising from employee lawsuits and the high cost of enacting collective bargaining agreements are among the reasons private investors oppose the formation of labor unions and government intervention.

Viewpoint on Government Involvement in Labor Relations

There is a need for government involvement to regulate labor relations in different sectors of the economy. The benefits of government interventions outweigh the costs. Interventions help ensure stable labor relations in the economy, thus resulting in a stable market system that encourages optimum economic production. Improved production activity will boost economic development and growth in a country.

Government interventions result in improved work standards and fair compensations, thus improving the overall well-being of workers in different industries. Private companies can collude and implement unfair working standards and remunerations in an economy where labor relations operate on a free market force. The firms might resort to unlawful labor practices to maximize profits.


Government involvement in different economic sectors presents different benefits and costs to the population. However, various sectors require different levels of government involvement to function effectively. Some sections of the economy can function well with heavy government interventions such as military, education, and international relations. On the other hand, some sections of the economy will function effectively under a free market system with few government interventions, such as health and agriculture agencies.


Ames, E., & Forbes, S. (2014). Money: How the destruction of the dollar threatens the global economy – and what we can do about it. McGraw-Hill Education.

Budd, J. W., & Lamare, J. R. (2020). The Importance of Political Systems for Trade Union Membership, Coverage and Influence: Theory and Comparative Evidence. An International Journal of Employment Relations.

Campos, P. A., & Reich, M. R. (2019). Political analysis for health policy implementation. Health Systems & Reform5(3), 224-235.

Forbes, S. (2016, August 8). Can the government run the economy? [Video]. PragerU.

Gwartney, J., Stroup, R., Sobel, R., & Macpherson, D. (2018). Macroeconomics: Private and public choice (16th ed.). Cengage Learning.

Tamny, J. (2015). Popular economics: What the Rolling Stones, Downton Abbey, and Lebron James can teach you about economics. Simon & Schuster.


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